Thursday, October 29, 2015

Real Businesses Take Years To Profit?

One of the things I heard as an IBO and I believe is still said in some Amway meetings is that conventional businesses do not profit for up to five years. That's bogus. Conventional businesses make a profit as soon as they sell their first product. They may not have a net profit right away because of the initial investment into equipment and rental property, but they do profit by selling goods. The same principle would apply to an Amway business except that Amway IBOs have difficulty selling products. If you opened an Amway catalog and compared their prices to local retailers, you would know what I'm talking about.

Despite the small start up costs and the little to no overhead costs, most IBOs never turn a profit. I will acknowledge that many IBOs probably never do a single thing once they sign up. I believe there is an underlying story behind this as well, but I will move on. Out of the more serious IBOs, even in this group, most of them will never make a net profit if they are using tools. Factoring the cost of the website, the voicemail, standing orders, books and functions and cds, IBOs simply get drained of their money a couple hundred of bucks a month at a time. Amway uplines meanwhile, are earning profits on product purchases and someone upline are also earning profits on the tools. The tools carry a higher profit margin so it would make sense that some upline earns ore from tools than from Amway.

Toss in other challenges such as high prices for many products (higher than local retailers) and a spotty reputation from IBO behavior such as tricking people into meetings and you have an opportunity with nearly insurmountable handicaps. Yes, a few rare few and usually charismatic people can overcome these odds, but only one or two out of tens of thousands are able to do so. And even those whe reach the pinnacle of diamond, may not be able to maintain qualification. It's very common for someone to reach the level of emerald or diamond only to backslide and not qualify the following year. So much for residual income and walking the beaches of the world.

So I don't know the detailed statistics about how long it takes for a conventional business to turn a net profit. It may take up to five years. But based on my experiences and some number crunching, I'd have to say that the vast majorty of Amway Business Owners NEVER TURN A PROFIT - EVER, and most of them ending up with net losses when business expenses are factored in.


Anonymous said...

You are quite correct. It is absurd to claim that a conventional business doesn't start to turn a profit until five years pass. No small, independent business could survive if that were true! The owner would have to have vast resources of cash behind him in order to run a major enterprise at a loss for five years. A multimillionaire publisher like Rupert Murdoch can do that, or a mega-corporation. But an individual? No way.

Even granting the possibility of a long wait for a profit, the more important question is this, which Amway refuses to answer without lies and evasions: Where exactly does your profit come from? Is it from selling LOC and Dish Drops and Glister toothpaste to non-Amway customers (i.e. the general public), or is it from tricking other poor jerks into joining the Amway business?

I recall one Amway defender saying to me that, in regard to selling -- "There's money in width, but there's security in depth." By this he meant that if you could actually push Amway products on many general-public customers, you'd actually make a substantial profit (making money "in width," or by having a wide range of customers). But you'd have an even better deal if you had a deep down-line of other IBOs whose work served to make a profit for you (money "in depth").

That's why Amway is a pyramid scheme, no matter how much the company tries to weasel out of it.

Joecool said...

And the focus of Amway IBOs is recruiting and that's because you need guys at the bottom to make profits for guys at the top.